Venture capitalist Vinod Khosla is mad as hell, and he’s not going to take it anymore.
In a 2,111-word missive, Khosla takes on CBS’ 60 Minutes and their recent report — “The Cleantech Crash” — in which correspondent Lesley Stahl describes how after billions in losses and hundreds of millions in government subsidies the sector became a “dirty word.” Stahl interviews a former Energy Department physicist who says that the Silicon Valley moneymen and Internet geniuses, like Khosla, underestimated the complexity of the industry, and came at the problem with arrogance.
“Vinod Khosla is very smart, but would let him operate on your heart? No, because it is not his area of expertise,” says Robert Rapier, a chemical engineer specializing in biofuels. “[Vinod Khosla] set up a system where he overpromised and under-delivered, and so the public and the politicians all developed unreasonable expectations.” Rapier later claims that the U.S. government essentially paid Khosla to “learn the energy business.”
Khosla — who concludes his rebuttal with a quote from Bobby Kennedy about importance of those who take risks — says that 60 Minutes got a whole lot wrong, and compares the TV news program to the National Enquirer. Later, he tosses additional mud on the news organization’s already tarnished image, pointing out that it employs “Benghazi-style reporting standards that overshadow the truth.”
Writes Khosla in his memo to 60 Minutes and CBS:
You fundamentally do not understand how innovation works with platitudes like, “for every 10 startups, nine go under”. At Khosla Ventures, we invest in companies that have high failure probabilities, but the wins far outweigh the losses. I clearly explained that we expect 50-percent of our portfolio companies to make money and today, our overall cleantech portfolio is profitable; however, CBS chose to air sources who have never looked at the details of a quality venture portfolio. In fact, their so-called experts are only expert pontificators who have never produced any biofuels themselves. One always can find a “source “ to throw mud at anything to get on-air; CBS appears to want the same standards for sourcing as the National Enquirer.
You falsely implied that our companies have received disproportionate taxpayer money, despite my repeatedly telling you otherwise. While these numbers are hard to accurately calculate, to the best of our knowledge, a substantial amount of funding (greater than 90%) for our cleantech portfolio has come from private sources. When our companies have received funding from the DOE, the dollar amounts represent a small fraction of the investment from private dollars. It is naive to believe that we can subsidize energy on a large scale; this kind of thinking would bankrupt any government, and yet CBS seems to imply that all our investments are based substantially on taxpayer money or are dependent on ongoing subsidies, a statement that is simply untrue.
Khosla argues that 60 Minutes selectively chose what facts to present, and ignored successes, such as clean tech upstart LightSail, which he invested in alongside Bill Gates.
You chose to ignore other success stories like energy storage company, Lightsail, which we also shared with you. In fact, you did not even want to visit the solar, engines or agriculture success stories, among others. You chose to ignore these FACTS, because it did not jive with the story you wanted to tell. Is your job reporting all the facts or merely pushing “angles”?
Khosla’s main point does get across in the piece, when he tells Stahl this:
Look, we have to take risks. And risks mean the risk of losing money. So let me ask you a question. We’ve been looking for a cure for cancer for a long time. How much money has the U.S. government spent? Billions and billions of dollars. Should we stop looking for a cure for cancer because we haven’t found a cure?
Read the full memo here.
